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Originally published Monday, February 10, 2014 at 8:34 PM

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State gives pot applicants more time to find business locations

Hundreds of marijuana-business applications had been quickly disqualified for improper locations, state officials said last month. It turns out the culling hasn’t started as officials reversed course and now are giving applicants 30 days to come up with legal locations.


Seattle Times staff reporter

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State officials said last month they’d immediately disqualify any application for a marijuana business license tied to an improper address, such as a home or location within 1,000 feet of a venue frequented by minors.

The culling had already started, according to the state Liquor Control Board (LCB). About 500 such businesses were quickly identified and would soon receive disqualification letters, said Brian Smith, a spokesman for the board.

But no letters went out.

Instead, the board has reversed what appeared to be its firm position last month. It is now allowing applicants 30 days from the time they receive notice from the board to secure a legal address. Notifications started going out about two weeks ago.

The board is allowing entrepreneurs who applied with an illegal location, such as cupcake mogul Jody Hall, to change to a legal one.

For now, the impact of the board’s reversal is to keep many more entrepreneurs in the hunt for a license, which dismays applicants who had secured compliant locations, sometimes at a cost.

The change also marks another delay in the process of creating a legal marijuana industry with 334 retail stores and 2 million square feet of farms. The new legal-marijuana law took effect in December 2012. Stores are not projected to open until summer.

The board is addressing these recent changes gingerly. Officials responded to questions in writing. Board Chair Sharon Foster declined to comment further.

After stating last month that applicants needed to start with a legal location or face immediate disqualification, Smith said, “we decided that everyone who applied for a license should be provided with the same benefit of 30 days” to supply evidence they had secured a legal location.

If entrepreneurs fail to come up with a legal location in 30 days, Smith said, their applications would be dismissed.

Some have speculated that the change was made to help entrepreneurs who had applied in cities and counties that have imposed bans on legal pot businesses. But Smith said that was not a factor.

The stakes are high, particularly for retail licenses. The state plans to license 334 stores and has more than 2,200 retail applications to review. If there are more qualified applicants than stores, after background checks and other vetting, the state would use a lottery to determine winners.

Some applicants are frustrated. John Davis, CEO of two Seattle medical-marijuana dispensaries, said the board’s shift resulted partly from mixed messages sent by its staff. At licensing workshops, employees told entrepreneurs that their locations did “not need to be finalized to apply.” Then officials said last month they would disqualify any applications tied to improper locations.

Davis said the current policy is unfair to entrepreneurs like himself who have worked hard, and spent money, to secure legal locations for recreational-pot shops.

“The LCB has to be very careful or this could end in lawsuits,” Davis said. “I’m not threatening one. But I have to consider what’s best for my business.”

For others, the changes are more nuanced, said Robert McVay, an attorney at the Canna Law Group, which represents about 100 applicants.

While the changes are maddening to some of his clients, McVay said, for others they‘re welcome relief — and that includes some who thought they had locked up legal locations only to hit a snag.

“The bigger concern,” he said, “is we’re halfway through the process and it still feels like rules are being changed on the fly, ad hoc.”

That’s worked out for some.

Hall, owner of Cupcake Royale, applied just before the deadline for a retail license at 1111 E. Pike Street on Capitol Hill. Hall said she knew that’s not a legal location because it’s too close to a park but thought she was allowed to use a placeholder while she secured a deal at a compliant address.

She also had acknowledged that she probably applied for the wrong license. She had hoped to make pot-infused baked goods, which requires a processor license. As a retailer she could only buy from state-licensed processors and the rules do not allow her to hold both processing and retail licenses.

Under the new board policy, Hall has changed the proposed address of her retail shop to 2415 Airport Way S. in Sodo, which she said is compliant.

She said she’s still looking for another address and considers the Sodo location a fallback if another property can’t be leased.

She stressed that her retail business, called Royale Leisure Industries, “would not in any way be affiliated with Cupcake Royale.”

The liquor board’s Smith said applicants may change addresses at this point but not the type of license they’re seeking.

Bob Young: 206-464-2174 or byoung@seattletimes.com



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